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China-based start-ups help boost first-half IPO surge

SAN FRANCISCO -- Even before Alibaba completed the sale of its expected massive IPO to U.S. public investors, China-based tech firms already have landed here in a big way. U.S. initial public offerings by

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China-based start-ups help boost first-half IPO surge

John Shinal, Special for USA TODAY
Published 11:29 a.m. ET July 8, 2014

A worker performs shadow boxing during an open day at the Alibaba Group office in Hangzhou in east China's Zhejiang province on March 26, 2013. Alibaba Group is aiming to raise $1 billion in a long-awaited IPO likely to have ripple effects across the Internet. The Tuesday, May 6, 2014, filing sets the stage for the technology industry's biggest initial public offering since Twitter and its early investors collected $1.8 billion in its stock market debut last fall.(Photo: AP)

SAN FRANCISCO -- Even before Alibaba completed the sale of its expected massive IPO to U.S. public investors, China-based tech firms already have landed here in a big way.

U.S. initial public offerings by Chinese start-ups surged in the first half of this year, making them the second-most popular stock investment behind domestic companies, according to the latest IPO report from Ernst & Young.

In a six-month stretch that saw all U.S.-listed IPOs swell to their highest level in 10 years for both deal flow and aggregate valuation, 11 start-ups based in China raised $3.9 billion, the report says.

That was more than the $3.3 billion raised by 10 European start-ups in the first half, spurring China past Europe as a producer of innovative companies ready for U.S. public markets.

In all, 162 companies from across the globe raised $35 billion in the U.S. for the six months ended in June, with the total amount raised exploding 50% from the same period a year earlier.

The company's revenue for the quarter ended in December more than doubled, rising 118%, Cheetah Mobile said in its F-1 securities filing.

Ad sales are the company's most important business, Sheng Fu said.

Its revenue-growth figures show how the shift to mobile in China is just getting underway.

Cheetah mobile revenue surged 10-fold, yet still represented less than a fifth of the company's business, with most of the company's 362 million monthly active users accessing Cheetah Mobile services on their desktop PCs.

Last year, its revenue exploded 160%, to $124 million.

The Chinese, you might say, have landed here already in growth mode.

Sheng showed up with a five-person team and -- even more impressively – exchanged business cards with two additional people during our short walk near the city's Moscone Convention Center.

"We want to become a hub, not just a seller of apps," Sheng Fu says, adding that Chinese consumers are "not willing to pay for apps."

Our conversation was the first time I'd needed a Mandarin translator in 18 years of covering the tech industry, even though it wasn't my first time interviewing a Chinese start-up CEO.

Given the appetite of U.S. tech investors for fast-growing, China-based companies, it likely won't be the last time for either.